[Federal Register Volume 88, Number 225 (Friday, November 24, 2023)]
[Notices]
[Pages 82431-82433]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-25914]


=======================================================================
-----------------------------------------------------------------------

POSTAL REGULATORY COMMISSION

[Docket No. SS2022-1; Order No. 6803]


Special Study on Flats Operations

AGENCY: Postal Regulatory Commission.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: The Commission is recognizing a recently filed Postal Service 
document with the Commission concerning its plan to remedy 
inefficiencies identified in the Commission's flats study. This notice 
informs the public of the filing, invites public comment, and takes 
other administrative steps.

DATES: Comments are due: January 5, 2024.

ADDRESSES: Submit comments electronically via the Commission's Filing 
Online system at http://www.prc.gov. Those who cannot submit comments 
electronically should contact the person identified in the FOR FURTHER 
INFORMATION CONTACT section by telephone for advice on filing 
alternatives.

FOR FURTHER INFORMATION CONTACT: David A. Trissell, General Counsel, at 
202-789-6820.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction
II. Background
III. Postal Service Flats Plan
IV. Motions
V. Commission Analysis
VI. Notice and Comment
VII. Ordering Paragraphs

I. Introduction

    In accordance with the Postal Service Reform Act of 2022 (PSRA),\1\ 
the Commission submitted a report on the findings of its flats 
operations study on April 6, 2023.\2\ The PSRA also required the Postal 
Service to develop and implement a plan to remedy each inefficiency 
identified in the Commission's flats study or provide an explanation 
why remedying such inefficiency is not practicable. PSRA section 
206(b)(1). On October 6, 2023, the Postal Service submitted its plan to 
the Commission for approval.\3\
---------------------------------------------------------------------------

    \1\ Postal Service Reform Act of 2022, Public Law 117-108, 136 
Stat. 1127, available at https://www.congress.gov/117/plaws/publ108/PLAW-117publ108.pdf (PSRA).
    \2\ Flats Operations Study Report, April 6, 2023 (Flats 
Operations Study Report).
    \3\ See Submission of the United States Postal Service Flats 
Plan Pursuant to Section 206 of the Postal Service Reform Act of 
2022, October 6, 2023 (Notice); see also Notice, Postal Service 
Flats Plan Pursuant to Section 206 of the Postal Service Reform Act 
of 2022, October 6, 2023 (Flats Plan).
---------------------------------------------------------------------------

II. Background

    The Postal Service has faced significant challenges in processing 
and delivering flats \4\ in a cost-effective manner. For years, in 
response to statutory requirements and Commission directives, the 
Postal Service has been designing and implementing operational and 
pricing initiatives to address these issues, but the Postal Service has 
been unable to either quantify the expected impact of those initiatives 
or isolate the impact to specific products.\5\
---------------------------------------------------------------------------

    \4\ Flats, or flat-shaped mail, refers to large envelopes, 
magazines, and other flexible, rectangular mail that meet certain 
criteria. See United States Postal Service, Publication 32, Glossary 
of Postal Terms, July 1, 2016, at 88, available at https://postalpro.usps.com/storages/2016-04/pub32_glossary.pdf.
    \5\ Flats Operations Study Report at 23 (citing Docket No. 
ACR2021, Annual Compliance Determination, March 29, 2022, at 31, 
60).
---------------------------------------------------------------------------

    The PSRA required the Commission, in consultation with the 
Inspector General of the United States Postal Service (USPS OIG), to 
conduct a study evaluating the Postal Service's flats operations. PSRA 
section 206(b)(2)(A). The statute also required the Commission to 
submit a report on the findings of the study no later than 1 year after 
enactment of the PSRA. Id. To carry out the study, the Commission 
collected and reviewed flats data provided by the Postal Service. Flats 
Operations Study Report at 1. Commission staff also visited Postal 
Service facilities over a period of several months, visited mailers' 
facilities, contracted with an operations expert, and consulted with 
the USPS OIG. Id. On April 6, 2023, the Commission submitted its report 
on the findings of the study to Congress and the Postmaster General.
    In its Flats Operations Study Report, the Commission identified 
multiple causes of inefficiencies in the collection, sorting, 
transportation, and delivery of flats. Flats Operations Study Report at 
23-133. In addition, the Commission quantified the effects of the 
volume trends, certain investment decisions, excess capacity, and 
operational inefficiencies of the Postal Service on costs that are 
attributable to flats. Id. at 134-209. At the conclusion of the Flats 
Operations Study Report, the Commission provided eight suggestions to 
the Postal Service for consideration as the Postal Service develops its 
plan. Id. at 210.
    In response to the report, the Postal Service was required to 
develop and implement a plan to remedy each

[[Page 82432]]

inefficiency identified in the Commission's flats study or provide an 
explanation why remedying such inefficiency is not practicable. PSRA 
section 206(b)(1). Prior to implementing the plan, the Postal Service 
must give the public an opportunity to comment on the plan and the 
Commission must approve the plan. Id. On August 16, 2023, the Postal 
Service published a draft plan and sought public comments on the 
plan.\6\ On October 6, 2023, the Postal Service submitted its Flats 
Plan to the Commission for approval.
---------------------------------------------------------------------------

    \6\ See Notice of Availability of Draft Plan for Flat-Shaped 
Mail, 88 FR 55740 (August 16, 2023); see also Postal Service Flats 
Plan Pursuant to Section 206 of the Postal Service Reform Act of 
2022, August 15, 2023, available at https://about.usps.com/psra-flats-study/usps-flats-plan.pdf (Draft Flats Plan). Interested 
parties were invited to submit written comments during a 30-day 
period, terminating on September 15, 2023. Notice at 2.
---------------------------------------------------------------------------

III. Postal Service Flats Plan

    The Postal Service asserts that its plan conforms to the relevant 
statutory requirements and should be approved by the Commission. Notice 
at 2. In addition to considering public comments, the Postal Service 
states that it considered the Commission's suggestions, and the 
findings that inform those suggestions. Id. It notes that the Flats 
Plan incorporates the majority of the Commission's recommendations. Id. 
The Postal Service asserts that where it was unable to accept a 
Commission recommendation fully, the Flats Plan details how such 
recommendations may in the future become practicable. Id.
    At the beginning of its Flats Plan, the Postal Service describes 
how the implementation of the Delivering for America (DFA) plan will 
enable it to increase revenue from flats, while also reducing costs by 
addressing the inefficiencies that currently exist in the processing, 
transporting, and delivery of flats. Flats Plan at 2. The Postal 
Service claims that since enactment of the DFA Plan in March 2021, it 
has made significant progress.\7\ In addressing the Commission's 
suggestions from the Flats Operations Study Report, the Postal Service 
discusses specific initiatives relating to flats, and explains that 
these initiatives are part of the DFA plan. Flats Plan at 2-3. The 
initiatives include pricing to increase flats revenue, redesigning the 
network, improving the data quality, and pursuing initiatives to reduce 
bundle breakage. Id. at 4-17. The Postal Service also addresses the 
relationship between mail volume and productivity, and provides 
analysis to support its view that productivity declines and therefore 
increased costs, are due in part to volume declines. Id. at 17-24. 
Finally, the Postal Service addresses comments from the public received 
on its Draft Flats Plan, and ``clarif[ies] certain aspects of the flats 
plan in response to those comments.'' Id. at 24-27.
---------------------------------------------------------------------------

    \7\ Id. at 1-2 (referring to United States Postal Service, 
Delivering for America, Second-Year Progress Report (April 2023), 
available at https://about.usps.com/what/strategic-plans/delivering-for-america/assets/usps-dfa-two-year-report.pdf).
---------------------------------------------------------------------------

IV. Motions

    After the Postal Service filed its Flats Plan, the Commission 
received motions for leave to provide comments on the Flats Plan from 
the News Media Alliance (NMA) and the Association for Postal Commerce 
(PostCom).\8\
---------------------------------------------------------------------------

    \8\ Motion for Acceptance of Comments, October 16, 2023 (NMA 
Motion); Motion for Leave to File Comments, October 18, 2023 
(PostCom Motion).
---------------------------------------------------------------------------

    NMA and PostCom both state that acceptance of their comments on the 
Flats Plan would be in the public interest and assist in the 
Commission's decision whether to approve or reject the Flats Plan. NMA 
Motion at 1; PostCom Motion at 1. PostCom also provides examples of 
where the Commission has accepted pleadings in other dockets where such 
pleadings were not specifically authorized but would assist the 
Commission in its deliberations. PostCom Motion at 1. These motions are 
granted.
    In its comments, NMA states the Flats Plan ``lacks the 
comprehensiveness, metrics, and accountability'' needed to remedy well-
established flats inefficiencies.\9\ NMA recommends that the Commission 
reject the plan and direct the Postal Service to address the 
deficiencies identified by NMA. NMA Comments at 1.
---------------------------------------------------------------------------

    \9\ Comments of the News/Media Alliance on the Postal Service's 
Flats Plan, October 16, 2023, at 1 (NMA Comments).
---------------------------------------------------------------------------

    PostCom also urges the Commission to reject the Flats Plan and 
direct the Postal Service to revise the plan to respond to PSRA 
directives.\10\ PostCom attaches its comments submitted to the Postal 
Service on the Draft Flats Plan, where PostCom asserts the draft plan 
lacked, among other things, targets toward cost coverage improvement, 
and did not consider the diseconomies of scale that result from 
declining flats volume. PostCom Comments at 1. PostCom states that 
despite its comments, the Postal Service submitted the final plan that 
is ``essentially unchanged'' from its draft plan. Id.
---------------------------------------------------------------------------

    \10\ Comments of the Association for Postal Commerce, October 
18, 2023, at 1 (PostCom Comments).
---------------------------------------------------------------------------

V. Commission Analysis

    Upon consideration of the Flats Plan, the Commission finds that, as 
submitted, this plan presents a high-level proposal that lacks both 
important details and analytical support needed to evaluate the plan 
and determine whether it sufficiently and effectively addresses the 
inefficiencies identified by the Commission and described in the Flats 
Operations Study Report. The Commission suggested in the Flats 
Operations Study Report that the Postal Service quantify the impact of 
any initiatives on cost to ensure its efforts are effective. Flats 
Operations Study Report at 3. While the Postal Service explains that 
there are processes to validate potential net financial benefits of 
initiatives and methodologies for calculating and tracking the results, 
it does not provide any quantifiable metrics for potential benefits or 
cost impact results as it describes the initiatives throughout the 
Flats Plan. See Flats Plan at 17.
    Furthermore, the Postal Service does not provide a clear timeline 
for implementing the initiatives, with some initiatives seemingly 
already implemented and others in various stages of implementation. See 
Flats Plan at 7, 9-14. Additionally, while some initiatives appear to 
have been implemented as early as FY 2021, there is no timeline for 
when quantifiable impacts of these initiatives will be available.
    In its response to public comments, the Postal Service references 
technology updates to the Automated Flats Sorting Machine. See id. at 
26. This effort is well-advised and further details of these plans, 
including timelines, would improve the Commission's ability to evaluate 
the plan. Similarly, it is important for the Commission to understand 
the plan and timeline for other technology improvements, including to 
the equipment used to process bundles as a means to reduce bundle 
breakage.
    In addition, to thoroughly evaluate the Flats Plan, it is important 
for the Commission to learn more about the improved data-collection 
tools developed to enhance the reporting and tracking of bundle 
irregularities and bundle breakage. See id. at 7-9. The discussion of 
these tools highlights their capability to link images and other 
evidence of mail irregularities to the Mailer Scorecard but does not 
clearly specify whether the tools also resolve the other bundle 
breakage data quality issues the Commission set out in the Flats 
Operations Study Report. Id.; see also Flats Operations Study Report at

[[Page 82433]]

85-87. These data quality issues include missing data in the bundle 
breakage dataset for bundles without a full-service Intelligent Mail 
barcode (IMb) and the lack of ability to identify where in the mail 
processing flow a bundle breakage occurs. See Flats Operations Study 
Report at 85-87. Addressing these additional issues would allow the 
Postal Service to identify trends and causes of bundle breakage within 
the handling and processing of bundles, which were previously lacking 
in the data. Accordingly, the Commission will seek more information 
from the Postal Service to enable evaluation of the Flats Plan prior to 
issuing its approval. The Commission also will invite comments from 
other interested persons on whether the Flats Plan is consistent with 
applicable statutory requirements.

VI. Notice and Comment

    Interested persons may submit comments on the Flats Plan no later 
than January 5, 2024. Pursuant to 39 U.S.C. 505, Manon A. Boudreault is 
designated as an officer of the Commission (Public Representative) to 
represent the interests of the general public in this proceeding.

VII. Ordering Paragraphs

    It is ordered:
    1. The News Media Alliance's Motion for Acceptance of Comments, 
filed October 16, 2023, is granted.
    2. The Association for Postal Commerce's Motion for Leave to File 
Comments, filed October 18, 2023, is granted.
    3. Comments on the Flats Plan are due no later than January 5, 
2024.
    4. Pursuant to 39 U.S.C. 505, Manon A. Boudreault is appointed to 
serve as an officer of the Commission (Public Representative) to 
represent the interests of the general public in this proceeding.
    5. The Secretary shall arrange for publication of this notice in 
the Federal Register.

    By the Commission.
Erica A. Barker,
Secretary.
[FR Doc. 2023-25914 Filed 11-22-23; 8:45 am]
BILLING CODE 7710-FW-P